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Election Budget

Election Budget

Prime Minister Narendra Modi looked delighted as he laughed loudly as never before and thumped his desk to raise a toast to his interim finance minister Piyush Goyal in the Lok Sabha. Goyal had just announced a major sop for the lower middle income Indians. Those earning more than 5 lakh would come under tax net as against the current 3.5 lakh. What looked like part of a written script for BJP’s quest for victory in the 2019 General elections, Goyal paused, allowing his colleagues to go into synchronized thunderous applause. The opposition leaders including Rahul Gandhi seated there looked flummoxed; for they knew BJP had staged a march over them in election preparedness.

Was it a limited edition budget being presented by the interim Finance Minister or a brazen document doling handouts with an aim of getting votes for Modi in the 2019 General election, a few months away? A Congress leader summed it well: “It was not a vote on account but account for vote.”

BJP government has less than 90 days to go and, therefore, it had no right to present a budget with provisions of far reaching implications. It was assumed that the interim budget would be used by the ruling party for winning over people like workers; farmers etc. in view of the forthcoming election, yet none could ever imagine that BJP will break the convention of presenting an interim budget in the true spirit and not leave ample scope for the next government to unleash its vision and present a full-fledged budget.

By giving tax relief to the middle class and sops to farmers and unorganized sector workers – the details of which are not yet clear – Modi government has left no one in doubt that winning  election is the only aim of the government.

Modi had never shown respect for institutions and conventions that make India a democracy. For example, he had one of the most non-cordial relationships with the Opposition in the parliament; his government sacked several high functionaries including the CBI chief arbitrarily. What happened in the Lok Sabha in the name of interim budget amounted to the final nail in the coffin of BJP’s utter disregard for democratic norms and propriety.

The sops in the budget have many gaping holes in terms of number crunching and it could add to the government’s fiscal deficit. Piyush Goyal officiating for finance minister Arun Jaitley – the latter is away to US for treatment -   said gleefully that he was not presenting an interim budget but the vision of the government for a strong India. Should he not tell us what would the next government that is scheduled to take oath in middle of May do? Would it be voted to power to implement the vision of the previous government? Interestingly, States like Odisha and Telangana are already given higher compensation to farmers. Is BJP trying to provoke more governments into giving sops to farmers? The fiscal discipline that had been steadfastly cultivated by successive governments has therefore gone waste as BJP has reopened the subsidy to famers.

Many analysts who spoke on the budget have predicted that raising the limit of taxable income would enable some 2 crore families to have extra income and spend more. This in turn would lead to more consumption and also higher production. This is the precise formula on which the economists base their calculations for growth.

However, these experts do forget that the interim budget has not touched the tax rates for all those who are earning above Rs 6.5 lakh. In fact it’s this section of economy that ends up spending more and drives the sales of the fast moving consumer products. The interim finance minister should have given rebates to all sections of tax payers.

In its hurry to make a vote catching budget, Piyush Goyal has simply glossed over the real gigantic problems facing the nation. The two major problems that India faces today are obviously the rampant unemployment and the agrarian crisis. Piyush Goyal conveniently chose not to say anything specific to tackle the high level of unemployment.  In fact, a report of the government agency National Sample Survey Organisation (NSSO) has said at 6.1 percent the unemployment was all time high in 45 years. Instead of giving a roadmap for job-driven growth, the BJP has chosen to boast about its schemes and slogans about how India would become great under the Modi rule.

At Rs 500 a month, the sop for farmers are too small and only rubs salt to their wound. The move has apparently been announced in a hurry leaving questions about as to how will this paltry sum be distributed if the owner and tillers together claim the money. Besides, the move is in a reply to Rahul Gandhi’s promise of giving a guaranteed income for farmers and also waiving off their debts.

Going by Goyal’s budget, Indian farmers are doing fine; they are not ending lives over crop failures. Farmer today does not seed small doles but a comprehensive policy that will make their work remunerative and free them from the stranglehold of middlemen; the infrastructure for food preservation at local places has to come up. What the interim finance minister has given them in the budget is a paltry sum of Rs 6,000 each year.

More importantly Goyal has pushed fiscal prudence under the carpet. He hasn’t given clarity as to from where he would get money to fund his short fall in revenue after giving the promises money to the farmers. The government is silent on this.

(Published on 04th February 2019, Volume XXXI, Issue 06)